NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Productivity Measurement for a Distribution Firm

W. Erwin Diewert, Ann Marie Smith

NBER Working Paper No. 4812
Issued in July 1994
NBER Program(s):   PR

The paper derives a consistent accounting framework for the treatment of inventories when measuring the productivity of a distribution firm. The average purchase price of an inventory item during an accounting period must be distinguished from its average selling price and these two average prices should be distinguished from the corresponding balance sheet prices. The accounting framework is implemented for a distribution firm which sold 76,000 separate items. The firm achieved a 9.6 percent per quarter total factor productivity growth rate over 6 quarters.

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Published: forthcoming: Journal of Productivity Analysis, 1995

 
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